Wednesday, November 24, 2021

How to raise prices without raising prices

 From WSJ:

1. Unbundling services, lowering product quality and devaluing reward programs

... airlines have unbundled services so that fliers pay extra for checking luggage, boarding early, selecting a seat, having a meal and so on. The charges for these services don’t show up on the ticket price, but they are substantial. Second, the airplane seat’s quality, as measured by its pitch, width, seat material and heft, has declined considerably, meaning customers are getting far less value for the ticket price. And third, many airlines have steadily eroded the value of frequent-flier miles, increasing costs for today’s heavy fliers relative to those in 1996.

These practices are also common in other industries, whether it’s resort fees in hotels, cheaper raw materials in garments and appliances, or more-stringent restaurant and credit-card rewards programs.

2. Shrinkflation and the quantity surcharge

To raise prices covertly, the brand or the grocery store sells more of the higher-margin items by increasing their availability and visibility in the store, or withdrawing popular lower-margin items from circulation for a period. The prices don’t change, but customers pay more.

3. Disappearing deals and coupons

...Even increasing the threshold for free shipping, from $49 to $99, is tantamount to a price increase. 

4. The sunk costs of memberships

...f you consider that the warehouse club requires a separate mandatory membership fee, the customer is actually paying more per ounce at the warehouse club.

5. From good to better and from better to best

Another way to raise prices covertly is to introduce new, higher-quality versions at higher prices. 

BOTTOM LINE:  The smartest companies don’t raise their prices with great fanfare, because direct price increases are often met with customer resistance.

HT:  Quinn C.


  1. As a Brazilian, we had a rich experience on this topic during hyperinflation (between 1970 and 1994). Other examples: require a premium for installment purchases; change the product size; introduce low-quality products with alternative brands, making it challenging to find the highest quality product; charge for additional "services"; remove the product from the market and make it available on the alternative market at a premium; require an upfront fee to ensure future product availability; between others.

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